Stocks

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)

By George Hay

LONDON, Feb 19 (Reuters Breakingviews) - The UK government
is toying with the idea of giving away its RBS shares (RBS.L) to
the public. It should consider the law of unintended
consequences. A putative investor sets out what could go wrong
in this unhappy letter to the bank’s chairman, after throwing in
the towel in 2015.

To: Philip Hampton, RBS chairman

From: Ivor Major-Bank

Sent: Apr. 1, 2015

Dear Mr Hampton,

I realise this will come as something of a blow to you, but
after eight years and no end of self-recrimination, I feel I
must finally sell my Royal Bank of Scotland shares.

As an increasingly embittered holder of RBS stock since Aug.
8, 2007, there have been precious few highs and a great deal of
lows. My total return of minus-92.5 percent is somewhat
disappointing. But that’s not why I’m selling out now. Oh no.
The real reason is your free share giveaway when the government
decided to get rid of its 81 percent stake in 2013. All my
fellow countrymen got shares, and the number of RBS shareholders
went from 214,369 to just over 43 million.

At first, I thought nothing would change. Everyone fretted
that the vast majority of RBS shares would be controlled by a
group of disengaged puddings, but not me. We’d already had five
years of that with UK Financial Investments.

In fact, things went downhill alarmingly quickly. The first
annual general meeting after the giveaway was a complete
disaster. I had become accustomed to my yearly trip up to the
comparatively homely Edinburgh International Conference Centre,
but instead I had to sit with 90,000 of my new investor
colleagues in Wembley Stadium. I felt for you as you tried to
manage the live video link-up with Old Trafford, Murrayfield and
various other national sports venues stuffed with irate
shareholders, while the entire West Stand chanted: “You’re
ex-growth, and you know you are”. But I lost patience when it
came to the questions. They went on for three days.

This year’s AGM was barely any better. After last year’s
debacle, letting everyone re-elect directors remotely from home
was probably the right move. It was unfortunate, then, that so
many shareholders misinterpreted the rules and thought they had
to vote at least one director off, like on X Factor. Poor old
Tony Di Iorio never stood a chance.

The final straw came with the text message harassment. I
thought PPI ambulance-chasers were bad. Now I get at least 40
texts a day from an offshore phone number informing me that
millions of people in the Far East want to buy my shares. Until
recently, it didn’t seem worth it for just a few hundred quid.
But now I’m surrounded by Chinese sovereign wealth funds that
have managed to amass a 50 percent stake by buying at a tenth of
book value. We might have got more money if we’d just sold them
the stake in the first place.

I don’t blame you or poor Stephen Hester, now entering his
eighth year as chief executive without a bonus. But I’ve had it
up to here with UK banks. That’s why as of today I’m switching
into Monte dei Paschi di Siena. Its shareholder register is, I
hear, getting smaller by the minute.

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